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PETRONAS
PETRONAS, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company that was founded on 17 August 1974. Wholly owned by the Government of Malaysia, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and adding value to these resources. PETRONAS is ranked among Fortune Global 500's largest corporations in the world. Fortune ranks PETRONAS as the 75th largest company in the world in 2013. It also ranks PETRONAS as the 12th most profitable company in the world and the most profitable in Asia.345 Since its incorporation, PETRONAS has grown to be an integrated international oil and gas company with business interests in 35 countries. As of the end of March 2005, the PETRONAS Group comprised 103 wholly owned subsidiaries, 19 partly owned outfits and 57 associated companies. Together, these companies make the PETRONAS Group, which is involved in various oil and gas based activities. The Financial Times has identified PETRONAS as one of the "new seven sisters":6 the most influential and mainly state-owned national oil and gas companies from countries outside the OECD. The group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas todownstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmissionpipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment. PETRONAS provides a substantial source of income for the Malaysian government, with 45% of the government's budget dependent on PETRONAS' dividend, moreover in 2011 government actual balance has 5 percent deficit of Gross Domestic Product.7 The company is headquartered at the Petronas Towers which was officially opened on Malaysia's 42nd National Day, 31 August 1998 – in the corporation's 24th Anniversary year. On 26 February 2015, Petronas cut its 2015 capital expenditures budget after reporting a $2 billion fourth quarter loss, the company’s first loss since it began reporting quarterly results five years ago.8 History PETRONAS was not the first company to extract oil or gas in Malaysia. It was Royal Dutch Shell that began the oil exploration in Sarawak, then under the White Rajahs, at the end of the 19th century. In 1910, the first oil well was drilled in Miri, Sarawak. This became the first oil producing well known as the Grand Old Lady. Shell was still the only oil company in the area in 1963, when the Federation of Malaya, having achieved independence from Britain six years before, united with Sarawak and Sabah, both on the island of Borneo, and became Malaysia. The authorities in the two new states retained their links with Royal Dutch Shell, which brought Malaysia's first offshore oil field onstream in 1968. Meanwhile, the federal government turned to Esso, Continental Oil, and Mobil, licensing exploration off the state of Terengganu, in the Malay Peninsula, the most populous region and the focus of federal power. By 1974, however, only Esso was still in the area. It made its first discoveries of natural gas in that year and then rapidly made Terengganua bigger producer of oil than either Sarawak or Sabah. By 1974, Malaysia's output of crude oil stood at about 81,000 barrels per day (12,900 m3/d). Setting up a state oil and gas company: 1970s Several factors converged in the early 1970s to prompt the Malaysian government into setting up a state oil and gas company, as first proposed in its Five Year Plan published in 1971. Former Chief Minister of Sarawak, Tun Abdul Rahman Ya'kub was one of the people who proposed the idea of Malaysia setting up their own oil company.9 These were years in which power in the world oil industry began to shift away from the majors, which then controlled more than 90% of the oil trade, toward the Organisation of Petroleum Exporting Countries (OPEC), as well as a proliferation of new private and state companies joining in the search for reserves. By 1985, the majors, reduced in number from seven to five, were producing less than 20% of the world total. It seemed that Malaysia would either have to join the trend or continue to leave its oil and gas entirely to Royal Dutch/Shell and Esso, multinational corporations necessarily attuned to the requirements of their directors and shareholders, rather than to the priorities the government of a developing country might seek to realise. Further, an agreement between Malaysia and Indonesia, signed in 1969, had settled doubts and disputes about each country's claims over territorial waters and offshore resources at a time when both were heavily indebted to Organisation for Economic Co-operation and Development (OECD) governments and banks as well as to theInternational Monetary Fund (IMF) and the World Bank. Setting up a state oil and gas company, through which the government could get international capital but avoid tangling with foreign oil companies or governments, had worked for Indonesia: why not for Malaysia as well? The oil crisis of 1973–74 made the government even more aware of Malaysia's dependence on foreign oil and foreign capital in general. Another factor in the decision was that the technology had recently been developed for extensive exploration and drilling offshore. The local geography included a combination of broad basins of sedimentary rock with calm and shallow waters around the Sunda Shelf, making exploration for gas and oil relatively easier and more successful than in most areas of the world. Malaysian crude turned out to be mostly high quality with low sulphur content. A final and crucial factor in the creation of PETRONAS, and its continuation in much the same form since, has been the political stability of Malaysia. Since the restoration of parliament in 1971, the country has been ruled by the National Front (Barisan Nasional), the heirs to the Alliance Party which had been dominant from 1957 to 1969 and the originators in 1971 of the New Economic Policy, which was designed to improve the economic position of Bumiputras—native Malays and other natives in Sabah and Sarawak—relative to Chinese and Indian Malaysians and to foreign corporations. The difficulties this policy has caused for foreign companies and investors are outweighed by the benefits they believe they gain from Malaysia's political stability. The Malaysian government chose to create a state company, rather than using taxes, production limits, leasing, or other familiar instruments of supervision. The government wanted, and needed, the co-operation of the majors but also sought to assert national rights over the use of the country's resources. A state company, having both supervisory powers over the majors and production activities of its own, was a workable compromise between allowing the majors full rein and excluding them, along with their capital and expertise, altogether. PETRONAS was established in August 1974 and operates under the terms of the Petroleum Development Act passed in October 1974. It was modelled on Pertamina, the Indonesian state oil and gas company founded in 1971 in succession to Permina, which had been set up in 1958. According to the 1971 plan, PETRONAS' goals would be to safeguard national sovereignty over oil and gas reserves, to plan for both present and future national need for oil and gas, to take part in distributing and marketing petroleum and petrochemical products at reasonable prices, to encourage provision of plant, equipment, and services by Malaysian companies, to produce nitrogenous fertilisers, and to spread the benefits of the petroleum industry throughout the nation. On 6 September 1974, Malaysia's then prime minister, Tun Abdul Razak, announced the appointment of Tengku Razaleigh Hamzah as chairman and chief executive of PETRONAS. Tun Razak said: "From among the new blood, I intended to bring Tengku Razaleigh into the Cabinet. However, I have an important job for him, a job as important as that of a Cabinet Minister. I have decided to appoint him as chairman and chief executive of PETRONAS, which is equivalent to being a Cabinet Minister.".10 Subsequently, Razaleigh had to relinquish his job as Chairman of PERNAS which he held from 1970, but retained the chairmanship of Bank Bumiputra. Having created PETRONAS, the government had to choose what forms its dealings with private oil companies would take. Starting with its legal monopoly on oil and gas activities and resources, it had several options: it could simply award concessions without taking part in production, management, or profits; it could try offering services at the supply end; or it could make contracts to cover profit-sharing, production-sharing, joint ventures—sharing both profits and costs—or all stages of the process, under "carried-interest" contracts. PETRONAS' first move was to negotiate the replacement of the leases granted to Royal Dutch/Shell on Borneo and to Esso in the Peninsula with production-sharing contracts, which have been the favoured instrument, alongside joint ventures, ever since. These first contracts came into effect in 1976. Allowing for royalties to both federal and state governments, and for cost recovery arrangements, they laid down that the remainder would go 70% to PETRONAS and 30% to the foreign company. Esso began oil production in two offshore fields in 1978, exporting its share of the supply, unlike PETRONAS, whose share was consumed within the country. PETRONAS went downstream for the first time in 1976, when it was chosen by the Association of South East Asian Nations (ASEAN) to begin construction on the second ASEAN joint industrial project, a urea plant. The subsidiary, Asean Bintulu Fertiliser (ABF), is based in Sarawak and now exports ammonia and urea all over the world. Also in 1976, Malaysia became a net exporter of oil, but exports were at such a low level as to make the country ineligible to join OPEC. This situation benefited Malaysia, and PETRONAS, by allowing the company a degree of commercial and political flexibility and reinforcing PETRONAS' chief purpose, Malaysian self-reliance. PETRONAS supervised its foreign partners' oil activities, taking no direct role in production until 1978, when the government saw to the creation of a subsidiary for oil exploration and production, PETRONAS Carigali. It began its work in an oil field off the Peninsula. PETRONAS retained its supervisory powers over all oil and gas ventures, particularly on issues of health and safety and environmental control. Corporate Logo Petronas' logo was created in 1974 by Dato Johan Ariff of Johan Design Associates.18 He is also responsible in creating the Logo of many Petronas subsidiaries, JVs, link-companies and properties, including Kuala Lumpur City Centre (KLCC), MISC, MMHE, Universiti Teknologi PETRONAS (UTP), Kuala Lumpur Convention Centre, Putrajaya Holdings, Prince Court Medical Centre (PCMC), PETLIN, Malaysian Petroleum Club and Mesra Mall, to name a few. Logo concept The basic structure is geometric, embodying metaphoric and alpha glyphic nuances of an oil drop and a typography 'P', the latter being evident in the triangle assigned at the top right corner. The triangle is also an essential element to define directional movement and dynamism. The placement of a solid circle in the Logo is interpretive if the wheel of the oil and gas industry while outline of the drop simulates a driving system, the energy which to be derived from oil. The corporate colour chosen for the logo is emerald green, an obvious reference to the sea from where oil and gas are drilled. The corporate logotype, named "Alpha PETRONAS", is designed in uppercase exclusively for Petronas and its subsidiaries. Each alphabet is rendered with a rounded profile to assume fluidity and viscosity, while emphasising the oil based operation. Refreshed logo In 2013, Petronas introduced a refreshed version of its corporate logo19 at the 2013 Asia Oil and Gas Conference (AOGC 2013). A renewed "look and feel" has been incorporated to the original Petronas' oil drop logo to reflect the visual expression of Petronas' Group Positioning, reimagining energy™. The refreshed logo was part of a group-wide exercise to further strengthen the visual potential of Petronas' corporate icon by making it more contemporary while building on the existing equity and legacy of the Petronas brand. In essence, the refreshed logo symbolises the growth and progression of the Petronas brand. Petronas was established during the oil and gas crisis in the early 1970s. Over the years it has focused on building its business and operational capabilities and continues to seek more efficient and better methods of managing and adding value to Malaysia's oil and gas resources and meet increasing energy demands. This challenging spirit has propelled Petronas from being a manager of Malaysia's hydrocarbon resources to become a fully integrated oil and gas multinational. The organisation was among the earliest national oil companies (NOC) to venture globally which has inspired many other NOCs to join the global oil and gas arena, changing the dynamics of today's oil and gas industry. PETRONAS will continue to play an active role in oil and gas by focusing on collective efforts to do things differently by challenging industry norms to achieve real sustainable long-term growth. Throughout its journey, Petronas has ensured that people benefit from its activities through business and employment opportunities, education sponsorship and quality products and services. The refreshed version is Petronas' third generation logo. The original Petronas logo was developed in 1974 when Petronas was first incorporated. The basic structure comprises an oil drop feature and symbol "P” that conveys its core business in oil and gas, and dynamism of the company. At the centre of the oil drop is a solid circle that symbolises the complete cycle or value chain of the oil and gas industry. Meanwhile, the familiar Petromnas emerald green represents the seas and land where oil and gas originates. The refreshed logo's softer curves have been added to the oil drop which depicts a continuous flow that symbolises Petronas' drive for progress and challenging spirit in meeting the energy demands and expectations of its stakeholders. The Petronas name has been repositioned below the oil drop and the font has been sharpened to enhance visibility and give prominence to the oil drop in the logo. Subsidiaries See also References External links